Economy

Jay Powell, the Federal Reserve Chairman, has banned any public appearances by any member of the Fed, Cockburn hears. Appearances at conferences have been canceled, all scheduled interviews have been abandoned and any comments on or off the record are outlawed. This unprecedented action is a reflection of two pressures. First, there are growing economic indicators that suggest the US is heading into a recession with the Dow plunging 800 points on Wednesday. Second, relations with the White House have reached a new low. President Trump has pinned the success of his presidency upon a strong economy and his qualifications as a businessman who understands the economy. If a recession takes hold, Trump believes his reputation will be destroyed and his chances of reelection dimmed.

The Federal Trade Commission’s decision to fine Facebook $5 billion for privacy violations is an expensive slap on the wrist that will do little to change anything in what is developing as a titanic struggle between the nation states (governments) and the new market states (technology companies). Across the world, the nation states are struggling to keep pace with technology developments and largely failing. Meanwhile, the nation states are proceeding at breakneck speed to develop a world of their choosing where countries become less and less relevant to the course of our future history. The FTC fined Facebook for a series of ethics and privacy violations and imposed the largest fine in the FTC’s history.

‘We’re holding a gun to our own heads,’ said Sen. John Cornyn in June. He was talking about President Trump’s threat to impose tariffs in order to force Mexico to crack down on illegal immigration into the Unites States. Many congressmen agreed, fearing, as establishment figures are prone to do, that Trump was risking the whole economy for some nebulous border demand. A month later, it seems Trump’s tariff gambit has worked. After Mexican officials agreed to crack down on illegal immigration to avoid US-imposed tariffs, the Department of Homeland Security reports that border apprehensions dropped from 144,278 in May to 104,344 in June — a 28 percent decrease.

‘If we will not endure a king as a political power,’ Sen. John Sherman of Ohio said in 1890, ‘we should not endure a king over the production, transportation, and sale of any of the necessities of life.’ These words helped drive through the Sherman Anti-Trust Act that saved early American capitalism by breaking up Standard Oil and the robber barons’ fiefdoms.A long line of Anglo-Saxon dragon slayers straggles behind the senator, all the way back to King John at Runnymede. Over-mighty kings and industrial barons get short shrift in Britain and America. This isn’t mere resentment. It is a philosophy of power and knowledge, and the principle behind democracy and free markets.

'First, I think it’s really important to understand that the Iranians are sowing disinformation,' Mike Pompeo told reporters Sunday en route to the Kingdom of Saudi Arabia and the United Arab Emirates  ('two great allies in the challenge that Iran presents.')'You’ll see too,' the secretary of state continued, 'that our campaign that began when President Trump took office will continue. On Monday, there’ll be a significant set of new sanctions.' Sure enough, this afternoon Trump announced intensified sanctions on Iran’s Supreme Leader.With that, the secretary was off, jetting from Joint Base Andrews to Riyadh and Abu Dhabi.

Let's not mince words. President Trump and his loyalists were dead right. His threat of tariffs pushed Mexico to work harder to stop the Central American caravans, and the migrants who hope to exploit immigration law loopholes in order to receive asylum in the United States. And the bipartisan, Trump-loathing political, business and media establishments were all dead wrong. They warned that his strong-arming would ignite a trade war, disrupt the thick web of supply chains linking the American and Mexican economies, and risk a recession. Equally off-base was the establishmentarians' angst that Trump's gambit would endanger the revamp of the North American Free Trade Agreement (Nafta) that he has sought and which Mexico and Canada recently signed.

Donald Trump likes to brag about his deal-making prowess. During his visit to the United Kingdom, he’s touting the prospects for a ‘very, very substantial trade deal.’ But even as he dangles sugarplums before the British, he’s blowing up another agreement that he wanted to complete before the 2020 election — the United-States-Mexico-Canada Agreement, which is supposed to supplant NAFTA.His attempt to fuse national security and nationalism in the form of a tariff on Mexico could end up torching his own presidency. Trump’s big idea — concocted by his aide Stephen Miller — is that he can pressure Mexico to crack down on immigration by pressuring it with tariffs.

The cryptocurrency winter has turned to spring: having slumped from $20,000 in late 2017 to $3,200 a year later, bitcoin has lately risen like a rocket to $8,800. Though it doesn’t change my negative opinion, I admit that if I had bought a fistful of these wacky gaming chips last October when I gave the crypto concept a kicking at our Spectator conference on the subject, I’d be up almost 40 percent. Evidently, hints from the US Federal Reserve and the European Central Bank that further bouts of ultra-low interest rates and quantitative easing may be in the offing have spurred what the FT calls ‘a rally in riskier assets’. Crypto is the new gold for those who distrust central banks and seek stores of wealth that governments can’t reach.

At 12:01 a.m. on Monday, President Donald Trump went a long way toward defusing a potential war – not with Iran, but Canada and Mexico, where Trump revoked tariffs he had imposed in the name of national security. Why the sudden bout of tariff reduction? The president is focusing on a one-front trade war with China. The restrictions began as two fronts of the same war. Trump imposed 25 percent tariffs on steel and 10 percent tariffs on aluminum imported from China last March. Then he extended those tariffs to the EU, Canada, and Mexico on June 1. But the president seems to have concluded that the US can no more fight a two-front war in trade than on the battlefield.

What delicious reading it makes going back over Paul Krugman’s missive in the New York Times on the morning after Donald Trump was elected in 2016. ‘Global recession with no end in sight...when are markets going to recover? A first pass answer is never...’ Those words should be carved into a façade somewhere in Wall Street and held up for ever after as an example of hubris of economic forecasters. In liberal circles nowadays there is always misery. The end of the world is always around the corner, where from economic calamity in the global capitalist system, climate change, rise of fascism, AI taking our jobs and creating mass unemployment, or whatever. But let’s get back to the real world for a moment.

Goldman Sachs isn’t just unpopular in the United States: their reputation black hole is expanding worldwide. In December 2018, Malaysia filed criminal charges against the investment giant over the 1MDB scandal, referred to as ‘the biggest financial scam in history’ — though Kuala Lumpur has indicated that it might be willing to drop the charges if Goldman pays $7.5 billion in reparations. After years of turning a blind eye to Goldman’s predatory behavior, hopefully 1MDB will push governments to take action against the firm memorably described as ‘a vampire squid’.

Has ‘Jay’ Powell gone wobbly, or does he know something we don’t? That was the question being asked after the US Federal Reserve, of which Powell is chairman, kept dollar interest rates on hold last week — rather than continuing to notch them upwards as it has been doing for two years — and hinted that the next move might actually be downwards. Trade tension with China, the impact of Donald Trump’s government shutdown and the risk of a no-deal Brexit were all cited as ‘cross-currents’ affecting the decision, but pundits led by Wall Street ‘bond king’ Jeffrey Gundlach declared the Fed to be ‘caving in’ to the demands of the stock market and the President.

We live in a time of hatred of elites, yet all these billionaires keep running for president. Howard Schultz, the ex-Starbucks CEO, has declared he is considering a run as an independent because he, like many others, is fed up with the current president and politics in general. Funnily enough, that is why the current billionaire president ran three years. That, plus ego. ‘This president is not qualified to be the president,’ says Schultz. That’s also what Michael Bloomberg (net worth: $44 billion) says, and the whispers that he is about to announce his candidacy are stronger than usual in this pre-election cycle. Bloomberg calls Trump a ‘pretend CEO’, and his would-be voters thrill at the thought that he is considerably richer than the Donald.

David Davis, the former Brexit minister, and Owen Paterson, another pro-Brexit ex-minister, confirmed Friday morning that they’re meeting with Trump administration officials to discuss a US-UK free trade agreement. Theresa May, the stricken British prime minister, refuses to discuss a US-UK FTA until after Britain has withdrawn from the EU in March 2019, and after Britain and the EU have made a new trade deal. This week, May forced a draft of her withdrawal bill through her cabinet, but sparked resignations from her cabinet and open revolt from pro-Brexit Conservatives. ‘We’re clearly here to advocate for a US-UK free trade agreement,’ said Shanker Singham of the Institute for Economic Affairs, who serves as an outside adviser to Boris Johnson.